It’s Almost Like a Third World Country!

June 7, 2008

Rising fuel prices and global food shortages have caused rice prices to increase 61.1% when comparing June 2007 to June 2008. Besides rice, soya beans rocketed 57.4%, corn soared 51.2%, wheat escalated 45.3% and even milk surged by 33.5%. What do all these mean to the ordinary Joes and Janes?

Cutting back unnecessary expenses, pre-plan menus, buy in bulk to gain volume discounts, buy with discount coupons or when there are sales. These are some of the immediate steps that can be taken. Sensing the financial anxiety, supermarkets were quick to roll out full page advertisements promoting no-frills house brands which cost less than the premium brands. A 10kg premium rice bearing the Royal Umbrella brand may cost SGD26 but a local supermarket house brand can be just SGD15. The difference of SGD11 is a big savings to the average family here and more and more are opting for the no-frills brands.

It’s perfectly understandable for international and local supermarkets to run a shouting match to rise above the din. However, even banks and department stores are jumping onto the bandwagon!

UOB Asset Management in Singapore has been giving rice to investors who subscribed to its United Commodities Plus Fund which was launched in 5 May 2008. Is the bank striving to reward it’s clients by rewarding them with things they find most useful and consider as important? Or is it a mere opportunistic marketing and public relations ploy to offer investors exposure to indexes tracking the energy, precious metals and agricultural markets? Some 18 private bankers at Citibank International Personal Bank Singapore were rewarded with bags of rice and cooking oil when they hit sales targets for April 2008. I bet the Citibank staff were extremely relieved that these rewards were made tongue-in-cheek and do not replace the usual cash incentives. Well, commodity prices are so high and anecdotes show.

When I read the above report, I really raised an eyebrow. It must be more than simply mass hysteria if even the marketing honchos have taken note of this trends. However, what really raised both eyebrows was the offer made by John Little’s, a well-known department store. The “first time ever, we are shaving 10% of all Electrical Appliances” didn’t get much of a response or an reaction from me. It’s this line that made my friend exclaimed,” It almost like a third world country!”:

“… And receive a FREE pack of New Moon Rice (1 kg) when you spend $60 nett in a single receipt. Hurry, these sensational offers are available from 12 to 15 June 2008 only, while stocks last.”

“It’s so cheapskate!” was another reaction I got from a girl friend.

“I can’t lug 2 – 3 kg of rice around town. They are assuming I drive! Why should I – when the petrol price is escalating and traffic is at a crawl on weekends?” That’s another outburst from a neighbour.

Now… do you call this a good marketing tactic or bad taste?

On the one hand, these marketers were quick to ride on market sentiments and give their clients exactly what they perceive as “valuable”.

On the other hand, where is the link between a mid-priced department store and rice? I found the explanation provided by UOB that it is “a largely symbolism of a component of the fund” a little tough to stomach, but at least I can see the relevance between a commodity fund and the rice gift.